The Anticipated Update on Grey Rock – A Land Resource Development

Here at Southern Way of Life, we like to keep our readers, many of who are actively looking buyers who plan to retire and relocate or find the perfect second home in the Southeast – informed. We wouldn’t be doing our job if we only reported on the positive stories. Now and then, we must report on situations we wish didn’t happen in our industry.

The story of Land Resources or Resource is a sobering one at best. Yes, they tried a name change, perhaps to rid themselves of their tarnished image that they earned over the years. You see, Land Resources started a handful of developments, blitzing the market with a great ad campaign and it didn’t hurt that HGTV tapped two of their developments, on two separate occasions, to be the location for the network’s new ‘Dream Home’. What a marketing ‘shot in the arm’ for any new development of free advertising and great PR exposure.

Not one of Land Resources’ developments has turned into a community of homes steadily being built, residents moving in, enjoying amenities and thereby seeing the value of the community and their property investment remain somewhat stable, even in this corrective market over the past few years. Rather, Land Resource developments from Eastern Tennessee to Western VA, to Western NC to Florida and the coast of GA have been a disappointment to most who invested in their communities. For some – a financial nightmare.

We asked one of our writers, Mike Czeczot, who has years of experience as an accomplished writer and journalist to look into what really happened with Land Resource(s). We receive many inquiries from frustrated and disappointed property owners who had hoped to build in these communities and we’d like to provide them with accurate information on the status of their investment.

Apparently, there is very little information on the internet for these folks to read and obtain updates. We wanted to provide a medium of information to many of the property owners who purchased in any one of these developments who are, to this day, searching for clarity and the truth in an effort to get on with their lives, best manage the situation they are in with owning property in a Land Resource development, so they can make an intelligent decision on what are their best options going forward. So, here goes from our writer, Mike Czeczot ….

Between 2004 and 2008, many invested both their hopes and dollars in a developer’s unwritten promise of a virtual “land of milk and honey” in Western North Carolina in a community called Grey Rock, by developer Land Resources.

Today, Grey Rock at Lake Lure is pretty much as it was back then – a gate leading to … not "milk and honey," but acres of dense woodland and a few narrow, overgrown dirt paths – a far cry from the promised bustling community of expensive homes, equestrian centers – even a helipad as advertised.

These folks deserve to be kept apprised of whatever efforts are being made to blast away the armor of litigation surrounding Grey Rock at Lake Lure – recent efforts such as:

The Grey Rock Community Association’s attempt to be "interveners" in a lawsuit brought by Grey Rock’s home county, Rutherford County, against Bond Safeguard Insurance Company to release infrastructure funds. More on this a bit later…

The significance of the recent settlement of a lawsuit brought by Bond Safeguard against Grey Rock’s developer, Robert Ward (or otherwise referred to as Bob Ward in this article), owner of Land Resource, LLC. We wouldn’t advise on being optimistic on this scenario either and we’ll explain why later in this article…

Attempts by Rutherford County’s planner to compile a list of property owners’ e-mail addresses, to periodically notify them of what the county is doing. We have learned the county planner is no longer making efforts to compile this list and communicate with Grey Rock property owners.

For the sake of writing this article, we did not find this information readily available. Rather, we were able to collect this information after about a month of research, phone calls and email attempts – and repeated calling and emailing…to just about every person who might have some direct knowledge of where things stand.

Unfortunately, there are those who’ve given up – or lost hope when the money ran out and foreclosures ran higher in number at Grey Rock. There is a number of Grey Rock properties listed on realtors’ websites, selling for a fraction of what they originally were purchased for…and still are not selling. And a growing number of lots are showing up almost daily as "REOs" – meaning they didn’t even sell at auction, and the lots have gone back to the lenders.

A few Grey Rock property owners are not only hanging in there, but vowing to not go down without a fight even if getting into the ring means spending a few thousand dollars more. We did not count them, but a few have banded together and quietly launched lawsuits against Land Resources, its founder, Bob Ward, and any other entities in any way associated with Grey Rock. And, if it makes frustrated property owners feel any better, there are two lawsuits in separate states – Kentucky and Florida against Robert Ward and Land Resources filed by … former employees, alleging they were pressured into using unethical sales tactics.

Grey Rock 101 – Let’s Get You Up To Speed

Before going much further, we need to plug in non-Grey Rock-ers, those who escaped the misfortune of investing in this development, some background, so they’re on the same page as those that are familiar with Grey Rock.

1997: Land Resources is founded by J. Robert Ward and based in Atlanta, Georgia. As it grows, it spins off a number of smaller entities whose names don’t matter much for this story. In a few short years, it starts developments throughout the Southeast, including Wild Ridges and Grey Rock in Western North Carolina; Laird Point in Panama City, Florida; Stillwater Coves and Cumberland Harbor in Georgia; Roaring River in West Virginia; and The Villages at Norris Lake in Eastern Tennessee, north of Knoxville.

2003: Land Resources, LLC, buys the 4,400-acre tract located south of Asheville. They name it Grey Rock at Lake Lure and they purchased it from Buffalo Creek timber company for "less than" $12 million, according to three online postings, with plans to develop it in three phases (a fourth section was to have been left alone).

2004: Land Resources buys two bonds for Grey Rock construction – a $26 million bond from Bond Safeguard for Phases 1 & 2, and a $15 million bond from AMS Surety Corp. for Phase 3.

April 28, 2005: Grey Rock has its official "Grand Opening" (though $15.6 million in sales had already been made), with some 900 home sites being offered at prices of $250,000-$700,000.

Sept. 21, 2005: The North Carolina Department of Environment and Natural Resources halts all construction at Grey Rock until Feb. 16, 2006, and fines Land Resources $94,000 for repeatedly violating erosion control regulations

December 2005: Home & Garden Television (HGTV) announces that its 2006 "Dream Home" – a $1.5 million, 5,700-square-foot, creature-comfort-filled home would be built at Grey Rock. Then-Land Resource spokesman Cameron McLemore says Grey Rock received 6,000 inquiries the day of the announcement. (Lightning had struck twice for Land Resource – HGTV’s 2004 Dream Home was built on its property in St. Mary’s, Georgia, leading to a huge spike in sales there, as well.)

2006: The winner of the HGTV "Dream Home" says he can’t afford the property taxes and other living costs. Land Resources buys the home, but it later goes into foreclosure, until bought in 2009 by its current residents, Bruce and Tracy Baldwin.

2007: Land Resource moves to the Orlando, Florida, area. Ward and his wife, Diane, also move from Atlanta to Orlando’s tony Isleworth country-club community, where they buy a $4.3 million, 8,800-square-foot home that had belonged to golfing legend Arnold Palmer. Other Isleworth residents are Tiger Woods and basketball star Shaquille O’Neal.

June 28, 2008: 15 Grey Rock property owners sue Land Resources, claiming the streams on their property were damaged by the developer’s construction practices.

July 11, 2008: Asheville Citizen-Times reports that Land Resource’s offices were closed "indefinitely."

Aug. 26, 2008: A federal class action lawsuit is filed against Land Resource, LLC, by a group identified as "Grey Rock at Lake Lure land owners." The suit alleges myriad violations of federal and state laws, including the Interstate Land Sales Full Disclosure Act, and Florida and North Carolina Unfair and Deceptive Trade Practices, among other charges.

Sept. 12, 2008: Bond Safeguard files a lawsuit in Western North Carolina District Court against Land Resource subsidiary LR Buffalo Creek, LLC, seeking unspecified damages. Also named as defendants were James Robert Ward (Bob Ward) and other Land Resource executives, as well as Wachovia and Key Bank USA - all but Ward are later dismissed by the court.

Oct. 15, 2008: another group of Grey Rock property owners files a civil suit against Land Resource, its affiliates, company executives, lenders, appraisers, the property owner’s association, and Scripps Network Interactive (owners of HGTV). The group also alleges that federal and state land sales laws had been violated, and adds that the $75 million in sales was more than enough to clear all liens and to complete the development’s infrastructure, utilities and amenities.

Oct. 30, 2008: Land Resources files for Chapter 11 in U.S. Bankruptcy Court, Orlando (later amended to Chapter 7); assets valuations vary, but average $115 million; liabilities were listed at $214 million, and among the creditors were The Atlanta Braves and Bank of America. Land Resources had 35 subdivision developments and 19 resort communities affected by the bankruptcy filing. Two published reports claimed that Land Resource had taken in $79,025,000 in Grey Rock land sales.

After being notified of the bankruptcy, Rutherford County asks Bond Safeguard for the $26 million to complete Grey Rock’s infrastructure, but the insurer says it wouldn’t pay out on the policy because Land Resources failed to use proceeds from lot sales to complete the infrastructure, a requirement of the bond agreement.

At about the same time, it’s determined that the $15 million bond with AMS Surety was fraudulent, and owner Ray Miller was arrested by the FBI on fraud charges.

Jan. 21, 2009: Land Resource assets are sold at a court-ordered auction for $15.8 million. However, exempted from the auction was Grey Rock, which, according to court records, had a then-fixed asset book value of $7,042,470 in unsold lots.

July 2009: Court records show that the Ward’s hadn’t made a monthly mortgage payment of $16,841 for more than a year, and they owed $3.6 million on the home they bought for $4.3 million.

Sept. 1, 2009: Bond Safeguard files a federal lawsuit in Orlando against Ward, his wife, Diane, and the trusts of their two daughters to recover $7.5 million it had paid for Land Resource developments in coastal North Carolina and Tennessee, alleging “fraudulent transfers” by Ward of business bucks into personal purses – and buying 11 luxury cars.

Sept. 21, 2009: Ward is arrested in connection with the shooting death of his wife, Diane, in the bedroom of their Isleworth home. He’s charged with second-degree murder, and the trial has yet to begin.

Dec. 18, 2009: The Carolina Mountain Land Conservancy buys a 1,527-acre tract of Grey Rock land (Phase 4) in a court-approved sale. The final closing price was $2.29 million, or $1,500 per acre.

May 25, 2010: Ward’s Isleworth mansion is sold at auction for $2.2 million to agent representing mortgage holder Wachovia Bank.

2009 and 2010: Ward asks the court to be released – the first time on bond, the second to attend a daughter’s college graduation. The judge denies both requests.

March 21, 2011: Ward again asks the court to be released – and this time, that the GPS device strapped to his ankle be removed, so that he could travel the country to earn money to pay for his defense. No court date had been set as of this writing.

Now that everyone’s up to speed, it’s back to the news. OK, more bad news…

Some blog sites – including Southern Way of Life, have mentioned periodically for almost two years now that there may be one or two buyers for the unsold lots at Grey Rock – companies named EvDevo and Catalyst Development, LLC, both based in Florida, both comprised of, at least in part, former Land Resource execs Jeffrey Lauro, and Bryce Grafton, to name a few. It was believed that EvDevo would be buying 254 of Grey Rock’s 717 lots. And EvDevo’s "managing partner" Scott Morris told a newspaper reporter in December 2009, “We stand prepared to close. There is a lot of work to be done there at Grey Rock but there is (an active) homeowners association and 1,700 lots sold… What we do from here is to join forces with Grey Rock’s HOA. There is $26 million in outstanding bonds and we will work with the county and HOA to try to recover the bonds and spend the money as best we can… Rutherford County did an excellent job on staying on top of all that. I have worked with counties where they didn’t get bonding; I am extremely impressed with their protection of the future homeowners in collecting the bonds."

Fast-forward to today… The phone number for EvDevo’s main office in Winter Park, Florida is no longer in service, and Catalyst Development, LLC, in Windemere, Florida, doesn’t have a phone or a website. And e-mails to Mr. Lauro, Grafton and Morris have gone unanswered yet interestingly none of our emails sent to them hoping they would talk with our firm, came back as "undeliverable".

Related bad news: If either company really did want to buy Grey Rock’s unsold lots, they missed a "legal steal" – they could’ve bought 249 lots for a grand total of $1 – yes, that’s "one dollar". On Nov. 20, 2010, an "absolute auction" ordered by the U.S. Bankruptcy Court in Orlando, Florida, was held, and there were two Grey Rock-related listings. One was for "the remaining 249 lots," to be sold as one group.

"An ‘absolute auction’ means just that," Auctioneer Bob Ewald told me recently, "it goes to the highest bidder, regardless of price – even if the (highest) bid is a dollar. Of course, the bidder would’ve had to pay more than $1 million in back taxes, but still…"

Ewald, the auctioneer said no one bid. "In the 19 years I’ve been doing this, that’s never happened." By the way, at the Nov. 20 auction, a second Grey Rock parcel – approximately 7 acres of commercial frontage at the entrance to Grey Rock – sold for $13,500; the winning bidder was to have paid $3,300 in back taxes.

Now, about that March 14, 2011, settlement in Orlando federal court in the lawsuit brought by Bond Safeguard against the Wards…

Some Grey Rock property owners got excited. They thought it meant there might be reason to hope. And that hope came innocently enough – by stringing together three pieces of the story – Bond Safeguard, Bob Ward, and “settlement” … well, it got some Grey Rock-ers to thinking, “If that suit was settled, then maybe…”

But, since attorneys for either side won’t return phone calls (and, by law, can’t divulge the settlement’s specifics anyway), they certainly can’t spin it in Grey Rock’s direction and say “yes, there’s hope” or “give it up.” And anyone else linked to, involved in,concerned about the Grey Rock debacle won’t say squat – about the settlement, Grey Rock’s status, the weather or the time of day – by phone or e-mail.

So, this I’m-not-a-lawyer-and-don’t-play-one-on-TV writer drank way too much coffee while pouring over documents available since the suit was filed in Orlando federal court on Sept. 1, 2009, just to see whether there’s even a tiny dose of “maybe”…

The suit concerned two other Ward properties – RiverSea Plantation near Southport, Carolina, and The Villages at Norris Lake in Tennesse

Bond Safeguard said it had shelled out $7.5 million for a bond Ward bought (Bond Safeguard hasn’t paid out anything for Grey Rock).

The settlement is very specific to one portion of one part of the five-part lawsuit – an allegation of “fraudulent transfers” by Ward of business bucks into personal purses (namely, the estate of his late wife and the trusts of their two daughters).

Sorry, but we couldn’t even get Rutherford County Manager John Condrey to tell us the name of the lawyer representing the county in its suit against Bond Safeguard, much less opine on the settlement’s impact on Grey Rock.

No ‘Big Picture’ ?

We understand why – to a degree. We mean, with so many people suing so many other people (or entities), one mis-spoken word, and your case is toast.

But what about the “big picture” people with no litigious constraints?

For example: The three court-appointed members of the Grey Rock community homeowners’ association. I mean, doesn’t "court-appointed" carry with it some degree of accountability? Stupid us; we assumed association members are supposed to act on behalf of… what’s that word again? Oh – "homeowners." Well, since there ain’t but one – Bruce and Tracy Baldwin, who bought the one-time HGTV "Dream House" and live there most of the year – what are these three people doing? "Collecting dues," Bruce Baldwin said. Is that it? "Well, they waived the dues for the past two years," Bruce adds.

We would’ve loved to have talked with association members before writing this – if only we knew who they were. But Ted Nye, of a property management company named IPM Corp. – which manages the association – would only forward to them an e-mail from us, with our questions.

We know that’s being a bit harsh. After all, they did do more than collect dues – they tried to be added to Rutherford County’s lawsuit against the bond company (sitting in North Carolina Western District Court in Asheville), only to be dismissed by U.S. District Judge Martin Reidinger on March 2, 2011, for three reasons having to do with jurisdiction, including "failure to state a cognizable claim."

They didn’t tell us that. Nye didn’t tell us that. We found that morsel while pouring through court dockets, and were told by Mr. Condrey, the Rutherford County manager. So, why aren’t they trumpeting triumphs and tumbles to property owners?

And, what about Rutherford County? We’re guessing they’d love to have Grey Rock filled with retirees, vacation home owners – heck, anyone. Having residents not only helps the tax base (fewer delinquencies), but hundreds of people buying food, fuel and fun certainly helps other residents buy food, fuel and some fun, and that’s an economic boost that can’t be ignored.

The county is doing something, of course (the lawsuit – remember?), but isn’t saying much. (The county’s suit against Bond Safeguard, by the way, is in the "discovery" phase. If you really need to know how relevant that is to this saga, feel free to call a lawyer; our feelings wouldn’t be hurt.)

County Planner Danny Searcy, who was hired "after Grey Rock was well under way — after the final applications had been submitted and approved" – said he had to become a "quick learner" about Grey Rock and the county’s role. "I started to compile e-mail addresses of (property owners) who contacted me with questions" about Grey Rock’s status. "Then, using that list, I’d send updates whenever I had something to update. But, keep in mind that my updates were only from our (the county’s) perspective."

But Mr. Searcy couldn’t keep doing that, and do what’s been added to his daily workload – he’s now also the county’s public works director.

Searcy said that, when he first came on board, he’d heard that "a couple of companies — Catalyst Co., I think, and EvDevo — had questions (concerning Grey Rock) about two years ago, but I haven’t heard anything since."

Reflecting on what he had learned so far, Searcy said, "We didn’t have any bad ordinances" at the time Land Resource sought the county’s blessings. "We’ve had many developers come here and go through the exact same processes, and we never experienced problems with them like (the county) did with Grey Rock."

Problems? Like what? "If there was just one thing to cite, I’d have to say it was the performance guarantee (to complete the roads) — they (Land Resource) just didn’t meet deadlines. They’d say, ’6 months more,’ or 12 months more’ — they kept stalling."

While Searcy said that "there was no one specific thing" that Rutherford County learned from the Grey Rock experience, he speculated, "maybe more discretion on sizes (phases) of developments — maybe 50 homes instead of 200, maybe 10 phases instead of four." Searcy also said that "the planning board is taking a serious second look at bonds… Whether it’d be the responsibility of the utility providers or the builders, we might end up requiring builders to provide a separate bond — electric bonds."

In Conclusion:

OK; there you have it – rather, there you don’t have it. News, that is. There’s not a lot of new stuff in this. But, if there is new stuff happening, it’d sure be nice if someone without an ax to grind or cause to promote would step forward and let Grey Rock property owners know.

If you’re that someone, feel free to jump on this, because we’ve promised to keep folks informed. And, unlike the “promises” mentioned earlier, we keep ours.

Also, if you’re one of the Grey Rock property owners, and your lot is located between the main gate and the HGTV 2006 “Dream Home” where the Baldwins live…

“Please tell them that the infrastructure’s in place all the way up to our house,” Bruce Baldwin tells us. “That one-mile is paved, all of the utilities are in; we even have (well) water and Internet (service).”

“And we’d love to have neighbors… the only ones we’ve had (since 2009) are the animals.”

Reading this story about an unscrupulous development company is what anyone buying real estate sure wants to avoid. Here’s the good news. In today’s economy and real estate market, buyers have wised up and no longer buy in developments where basic infrastructure is not in. There are too many good values in quality communities in today’s marketplace for buyers to risk, or feel the need to risk, buying in developments that are just getting started. Buyers today are choosing developments that are ‘communities’. Infrastructure is in, amenities are in place and being enjoyed and homes are there and more are being built. Hence, what would be the fate of a development like Grey Rock being introduced to the marketplace today? Even with an HGTV Dream Home being built and advertised in the development wouldn’t be enough of a reason without roads in, some amenities built – for today’s buyers to feel comfortable with purchasing there.

If there is a silver lining, perhaps this is it. Buyers are doing their homework…on the developer, on the development and the area it is located in. Today’s buyers want to see amenities in place and therefore developers who aren’t well on their way taking a development and transitioning it into a community just won’t survive in this market. Thank goodness.

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